Customers who take financial advice can on average be £40,000 better off than those that do not receive advice, an independent report by the International Longevity Centre has shown.

The report used data across a range of different individual and household assets in Great Britain between 2001-2007 and assesses the impact of financial advice on two groups. People who are ‘affluent’ and people who are ‘just getting by’.

The ‘affluent’ group was more likely to have a degree, be in a relationship and a homeowner. Compared to the ‘just getting by’ group, who were more likely to have lower levels of educational attainment, with no partner and renting their home. Below are some of the findings from the report.

When the ‘affluent’ group took financial advice they accumulated on average:

• £12,363 (17%) more in liquid financial assets.
• £30,882 (16%) more in pension wealth.
• A total of £43,245 more than those who were also deemed to still be affluent but didn’t receive any financial advice.

Those within the ‘just getting by’ group who received advice, accumulated on average:

• £14,036 (39%) more in liquid financial assets.
• £25,859 (29%) more in pension wealth.
• A total of £39,895 more than those who were also in this group and didn’t receive financial advice.

This research shows what qualified financial advisers have always said, that when people take advice on an ongoing basis they are overwhelming satisfied and benefit as a result.

The workplace pension juggernaut rolls on and is proving to be a major success. Since the project began back in October 2012 over 8 million employed individuals have been auto enrolled into a qualifying pension scheme, most for the first time ever.

The not so good news is that many small employers are struggling to complete their workplace pension duties in time for their staging date. A recent report published by leading group scheme provider Aviva highlighted around one in six businesses are missing their deadline.

The repercussions are severe both in time and in cost. The Pensions Regulator (TPR) is imposing record numbers of fixed penalty fines of £400 on defaulters and then a minimum £50 per day for those who fail to fix the issue in good time.

To demonstrate that TPR is not prepared to tolerate inaction it regularly publishes information on recent default scenarios. For example, a high street footwear firm turned a £400 fine into a bill for more than £40,000 after claiming it was too busy to meet its pension responsibilities.

Johnsons Shoes Company was issued with a £400 fixed penalty notice after it failed to comply with the law on the automatic enrolment of its staff into a workplace pension. The company had been required to check whether its staff qualified to be put into a workplace pension scheme and to confirm to TPR that it had done so.

Johnsons paid the £400 fine but still did not become compliant. Despite repeated reminders – and being warned that it would face a new fine that would increase by £2,500 per day if it did not meet its responsibilities – the Shepperton-based business continued to flout the law.

The fine reached £40,000 before the company finally became compliant. At that point, Johnsons refused to pay the fine – forcing TPR to take the business to court to secure payment. Eventually Johnsons agreed to pay the £40,000 fine and £2,000 court costs, preventing the need for a full court hearing on the matter.

“The failure by Johnsons to act, despite our repeated warnings, left it with a completely unnecessary bill that was more than 100 times the amount it was originally fined’’. He added “The vast majority of employers meet their automatic enrolment responsibilities. We will use all the powers available to us against the minority who choose to ignore their duties’’.

“Our message is clear: fail to comply with the law and you may be fined. Fail to pay your fine and we may take you to court.”

The Regulator inspection teams will be visiting hundreds of businesses across the country over the coming months to check that staff are being given the workplace pensions they’re entitled to.

To the uninitiated it all looks complicated and very involved. The truth is it needn’t be if you plan early and recruit the best advice. Matching the most suited pension scheme provider with your existing payroll is key. Business owners who make random choices without conducting in depth research or seeking professional guidance could spend a long time hammering a square peg into a round hole.

Having raised £250m of funding from Chinese investors last year, one of the UK’s largest pensions buyout businesses is speculated to float on the stock market to further aid its expansion.

The CEO of Pension Insurance Corporation Tracy Blackwell commented, “there is no pressing need at all” but “If the market really takes off even more than what we’ve seen, we will need access to capital and what it will come down to is whether that capital comes from the private markets or the public market… It’s about where the best capital is.”

The firm has grown in the past decade to run or insure £18bn of pension funds and the demand from companies looking to offload old pension liabilities doesn’t seem to be affected by the uncertainty around Brexit.

UK firms have almost £2 trillion in defined benefit pensions liabilities. These schemes, often called final salary pensions offer workers a guaranteed income upon retirement. While lots of these schemes no longer allow new accruals, the existing debts reach decades into the future.

The Pension Protection Fund, which rescues insolvent pension funds, states nearly 4,300 of these schemes were in deficit at the end of November 2016, compared to 1,522 in surplus. These figures change every month depending on the movements of financial markets and funding decisions made by the firms themselves.

Interest rates and bond yields are at record lows, giving the schemes investments poor returns, worsening deficits and possibly raising the cost of any buyout.

However the pension deficit is a problem large and medium companies are becoming scared to ignore, with regular mainstream discussion of the topic as part of the BHS Phillip Green scandal and lots of companies are choosing these pension buyout deals as a way of fulfilling their responsibility to their pension scheme members.

One worry is that the consolidated nature of the buyout market could lead to a very serious issue for the Pension Protection Fund and possibly the members of these schemes should one of these insurance companies fail.

The Pensions Regulator (TPR) announced a massive rise in the number of fines for pension non-compliance issued to UK businesses. This dramatic increase is attributed to greater numbers of SME’s reaching their staging dates than ever before.

TPR reported in its latest quarterly update (June to September 16) that it issued 3,728 fixed penalty notices, more than triple the 861 in the previous quarter. These fixed penalty notices come with a £400 fine for failure to comply with a statutory notice or some particular employer duties.

From June to September 15,073 compliance notices were issued, to remedy a breach of one or more automatic enrolment employer obligations, a 344% increase up from 3,392.

In some cases, TPR also issues businesses an escalating penalty notice of fines between £50 and £10,000 per day for failure to comply with a statutory notice. In the last quarter, TPR issues 576 of such notices, up from just 38 the previous quarter. TPR said this rise was ‘very small’ in comparison to the number of compliance notices, or to the number of employers staging. Less than 5% of these compliance notices progress to an escalating penalty notice.

TPR said: ‘Between July and September this year, we’ve had to use our powers more often, as increasing numbers of small and micro employers reach their staging date (deadline for having a qualifying workplace pension in place) and leave it to the last minute to prepare. Although the number of compliance notices has risen to over 26,000, we find the majority of employers subsequently comply when given this “nudge” to remind them of their duties.’

Employers and their advisers yet to ‘stage’ need to realise the requirement to install a workplace pension is not going to go away and that they must take action at an early date.

Recent market conditions have seen a massive rise in transfer values that could mean an upturn in the number of people wanting to move out of defined benefit (DB) schemes, something that may be considered strange given their reputation as the gold standard.

These once-common schemes promise to pay retirees an income related to their wage and the number of years of employment. They often come with generous perks such as inflation proofing or spouses’ benefits.

The Pension Freedoms legislation changes which, combined with the increase in values, has opened up the transfer option for these schemes. Under the new rules there are a number of benefits for clients when it comes to transferring out that go beyond rates of guaranteed income.

Many of these schemes are now in crisis, with inadequate funds to pay the promised pensions. This liability can be a crippling problem for the business, which has to prioritise its ailing pension fund ahead of other, vital investment in growth or future employees. This uncertainty undoubtedly poses a worry to our clients.

Some schemes are offering members “irresistible” deals to leave, as they struggle to fund their future liabilities. Cash equivalent values based on a multiple of projected income in retirement have in many cases soared from 20 times to 30 times.

An immediate consequence of the Brexit vote was that defined benefit schemes were sent further into the red. According to a leading pensions consultancy, the day after the vote the UK’s DB pension deficit rose from £820 billion to £900 billion.

Circumstances would need to be highly unusual for an existing employee member to give up future accrual for the sake of cash. However, for Scheme members with deferred benefits and no longer employed by the host employer such a huge cash windfall could be very tempting. One individual with a £1.4 million valued fund (who transferred) was able to take tax-free cash, buy a flat outright for his only daughter and leave almost £1million invested in funds of his choice.

High transfer values and the new pension freedoms mean individuals should at least explore the option to take control of their pension entitlements.

If you have a final salary pension and wish to understand options specific to you, a qualified adviser is required. We will take into account your full financial circumstances, your attitude to risk and your lifestyle to help you plan the right decisions for the retirement you want.

Calvert Financial Solutions is a trading style of Thomas Calvert who is an appointed representative of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited, which are authorised and regulated by the Financial Conduct Authority.